ECONOMICS
ECONOMIC GROWTH
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Growth and trade strategy where a country attempts to achieve economic parity with economic rivals by promoting its exports
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Growth and trade strategy where a country attempts to achieve economic growth by specializing its exports
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Growth and trade strategy where a country attempts to achieve economic growth by promoting its exports to foreign markets
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Growth and trade strategy where a country attempts to achieve economic growth by expanding its exports
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Detailed explanation-1: -An export-led growth strategy is one where a country seeks economic development by opening itself up to international trade. The opposite of an export-led growth strategy is import substitution, where countries strive to become self-sufficient by developing their own industries.
Detailed explanation-2: -Export promotion strategies comprise policy interventions including exchange rate policies (Bhagwati, 1988) to any ‘specific measures that generally amount to the government bearing a portion of the private cost of production of export’ (OECD, 1984).
Detailed explanation-3: -The export-led growth hypothesis (ELGH) postulates that export expansion is one of the main determinants of growth. It holds that the overall growth of countries can be generated not only by increasing the amounts of labour and capital within the economy, but also by expanding exports.
Detailed explanation-4: -Trade is an engine of growth that creates better jobs, reduces poverty, and increases economic opportunity. Recent research shows that trade liberalization increases economic growth by an average of 1.0 to 1.5 percentage points, resulting in 10 to 20 percent higher income after a decade.
Detailed explanation-5: -As we will discuss below, the main point of import substitution is that the locally produced goods are replaced with the imported goods. However, in an export promotion strategy, the external demand is the source of activity.